Owning a home comes with more than a mortgage. With low interest rates and down payment options, now is a great time to buy a home. But it is crucial, especially for first-time homeowners, to understand all of the one-time and recurring payments that come with buying a house.
One Time Fees Due at Closing
When you save up to buy a house, you will need to save for more than your down payment. At closing, you will be paying one-time fees to complete the transfer of the home from the seller to the buyer. These fees are an additional cost on top of the price of the property and add up to thousands of dollars. Factor these costs in when saving to buy a home.
Closing costs may include the following:
- Closing or Escrow Fee
- Application Fee
- Attorney Fee
- Home Appraisal
- Home Inspection
- Any special inspections (such as pest or lead paint inspection)
- Loan origination fee
- Up-front Mortgage Insurance Premium
- Discount Points
- Title Insurance
- Survey Fee
- Underwriter Fee
- Prepaid Interest
Closing costs are typically between 2-5% of the price of the home. If you are buying a house for $300,000, expect to pay between $6,000 and $15,000 at closing. For a full breakdown of what you will be paying, talk with your mortgage lender or closing attorney.
Recurring Monthly Payments
Monthly payments are what you can expect to pay as a homeowner each month. These include:
- Mortgage. Your mortgage payment includes monthly principal, interest, taxes, and homeowner’s insurance (PITI).
- Mortgage Insurance. If your down payment is less than 20%, most loans will come with a recurring mortgage insurance fee.
- HOA or Condo dues: If you live in a condominium or a neighborhood with a homeowner’s association, you will pay dues. Make sure you know this number before you close on the home or property, as it can add hundreds of dollars to your monthly bills.
- Utilities. This will include regular water, gas, electricity, sewage treatment, and garbage pickup.
Being a homeowner means you have complete freedom, as well as complete responsibility for your property. In addition to the monthly payments, make sure you have money set aside for interior and exterior maintenance and repairs.
Have more questions? We don’t want anyone to be surprised at the costs involved with buying a home. We are happy to help you understand the home buying process or connect you with a trusted mortgage professional for financial planning.